VAT FAQ

VAT related Frequently Asked Questions (FAQs)

Chapter 1

Basics of VAT

What is VAT?

Value Added Tax or VAT is such an indirect tax which is paid by the consumer through a registered person. Value Added Tax or VAT on a particular goods or service is determined on the basis of adding actual level of value of the said goods or service adjusting input tax payable against the supplied goods or service. 
Supposing a goods was purchased for Taka 1000 and it was sold at Taka 1500, in that case, an amount of Taka 130.43 was included as VAT for the purchase of Taka 1000 (Calculation: 1000x15/115); likewise, a VAT amount of Taka 195.65 shall be inclusive of Taka 1500, if the goods is sold at that price. (Calculation: 1500x15/115).
Actual addition will be Taka 500 if the goods is sold at Taka 1500 and as the seller had paid the price of the goods during purchase inclusive of the VAT, he will pay the VAT at the actual level of addition at the stage of sale, that is on Taka 500, taking back the VAT paid by him at the stage of purchase.
 Payable VAT on Taka 1500-                                Taka 195.65
VAT included in Taka 1000-                                 Taka 130.43


Net payable VAT on Taka 500-                    Taka 65.22 (Calculation: 500x15/115)
Method of calculation by seller-             = (1500x15/115) - (1000x15/115)
=195.65-130.43
=65.22 Taka

 

How VAT is levied?

VAT is levied on taxable import and taxable supply. VAT will be levied at the rate of 15% on all imports and supplies except on goods and services waived under the provisions of the First Schedule of the law.

Who pays VAT?

Procedure of Value Added Tax or VAT is an automatic taxing procedure based on input tax credit against supply or sale. The supplier accepts the paid up VAT on the purchase tax of the goods or service during the purchase as credit as against the VAT included in the price during supply of such goods or service and he pays the net amount of VAT. Therefore, the seller realizes the VAT from within the price obtained from the buyer and deposits the net amount of VAT to the Government treasury after taking credit on VAT at purchase level.

As VAT is considered to be a consumer tax, the consumer shall pay the whole amount of VAT as applicable on goods or service. As an intermediary procedure, the producer, the supplier, all, at every levels of sale, shall realize VAT on behalf of the Government and deposit to the Government treasury.

Who is the payer of VAT?

The VAT payer is the last consumer of goods or service in the Value Added Tax procedure. The supplier or seller realizes VAT from the purchaser at every level of sale and deposits to the Government treasury. As the consumer is the last among the purchasers, therefore, the ultimate liability of VAT devolves on the consumer. The supplier or seller deposits the VAT realized only at the level of sale to the Government treasury.

Why shall I pay VAT?

As a good citizen, I shall pay VAT on the following reasons:

01. It is the moral obligation of a citizen to pay tax in order to abide by the law of the State
02. Development of the State is not possible without the money received from tax.

When was VAT introduced in Bangladesh?

The Value Added Tax was introduced in Bangladesh on 1 July 1991. The new law on VAT will come into force with effect from 1 July 2017.

What is the rate of VAT?

The standard rate of VAT is 15%. Applicable rate of VAT in case of import and supply is 15% and in case of export is 0%.

What are the latest rates of VAT under the purview of VAT procedure 1991?

Under the purview of VAT procedure 1991 the standard rate of VAT is 15%. According to the budget of the last Financial Year (2015-16), apart from the standard rate, 10 lower rates are in place on the basis of reduced base price in case of some services, e.g., 1.5%, 2%, 2.5%, 4%, 5%, 5.5%, 6%, 7.5%, 9% and 10%.

What is the enlistment threshold for VAT registration and Turnover Tax?

The registration threshold under the new VAT procedure is Taka 8 million and enlistment threshold is Taka 3 million.

How does the VAT procedure function?

The VAT procedure functions through accepting input tax credit at every level of supply.  The tax payer, in accordance with the law and relevant rules and through maintaining accounts during every tax period, accepts paid up VAT on purchased input or goods. The VAT chain is maintained through accepting credit at every level of supply and paying Value Added Tax on all value additions.

Stage Price on which Value Added Tax may be levied Value Added Tax (Rate of Tax-15%) Credit Net VAT Addition
Import/ input accumulation stage
Supposedly, price at Import/ input accumulation stage- 1000/-
1000/- 130.43/- 0/- 130.43/- 1000/-
Output stage
Supposedly, sale price by the producer at output stage- 1500/-
1500/- 195.65/- 130.43/- 65.22/- 500/-
Wholesale stage
Supposedly, sale price by the seller at wholesale stage- 2000/-
2000/- 260.87/- 195.65/- 65.22/- 500/-
Retail stage
Supposedly, sale price at retail stage- 2500/-
2500/- 326.09/- 260.87/- 65.22/- 500/-
Tax paid by the consumer
(on final price- 2500/-)
326.09/-  

How shall I convince whether VAT will be applicable in my business?

If any goods or service stipulated in the First Schedule of the law falls under the purview of your economic activities, in that case, according to law, no obligation of VAT shall accrue in your business.

Moreover, the annual turnover of your business shall determine applicability of VAT in the business. (See Question- 2.2). But without regard to the annual turnover of your business, you can pay VAT after VAT registration, if you so desire.

What is tax under the purview of the new VAT law?

Under the purview of the new VAT law, tax means VAT, turnover tax and supplementary duty and interest, fine and pecuniary penalty in order to realize arrears.

What is the responsibility of a VAT consumer?

A consumer’s responsibility is to take delivery of the purchase invoice from the seller during purchase. Because, if he takes delivery of the VAT invoice properly, it will ensure deposit of the VAT included in this invoice to the Government treasury rightly.

What the purchaser can do if a seller does not incline to issue a VAT invoice?

Issuing VAT invoice is the responsibility of a seller, at the same time it is the responsibility of the purchaser also to take delivery of the VAT invoice properly. If the seller does not incline to issue VAT invoice on any ground, he will apprise the seller about this responsibility, because, if delivery of the VAT invoice is taken properly, it will ensure deposit of the VAT included in the invoice to the Government treasury rightly. Even then, if the seller does not incline to issue the VAT invoice, he may bring the matter to the notice of the VAT authority, online or may also inform the nearby VAT authority.

Chapter 2

Registration & Enlistment

What is Registration or Enlistment?

Under the Value Added Tax procedure, any importer, exporter or taxable supplier has to be involved in the VAT procedure. This involvement takes place with the VAT procedure through registration or enlistment. He has to abide by the VAT law through taking Business Identification Number in the prescribed manner under the purview of the VAT law. And under the purview of the VAT law, taking Business Identification Number in the prescribed manner is called registration or enlistment.

When shall I have to take Registration or Enlistment?

Registration shall have to be taken when turnover of economic activities exceeds Taka 8 million in every 12 (Twelve) months and Enlistment shall have to be taken when turnover of economic activities exceeds Taka 3 million in every 12 (Twelve) months. You have to take Registration or Enlistment within 15 (Fifteen) days of arising the necessity of Registration or Enlistment. Registration or Enlistment shall take effect from the 1st date of the following month.

What is Business Identification Number (BIN)?

Business Identification Number is the business identification number taken by an individual on the basis of turnover of his economic activities. This identification number can’t determine the nature and activities of the individual’s economic activities. It is a specific number of 9 digits by which a tax payer can be identified. A tax payer’s state of business affairs can be identified through this number from the website of the NBR.

How can I procure a BIN?

If limit of the annual turnover of my economic activities exceeds the prescribed limit, an application has to be submitted to the Commissioner in Form- VAT 2.1. After proper scrutiny and examination a Registration Certificate/ Turnover Tax Enlistment Certificate will be issued in my favour in Form- VAT 2.1 containing a BIN from the VAT system within three working days.

What are the advantages of having a BIN?

A businessman’s legal validity of business is established through the BIN. You can avail the following advantages:

  • All import- export activities except baggage import.
  • Registration of land or building in the name of the person registered or enlisted.
  • Obtaining Import Registration Certificate or Export Registration Certificate.
  • Supplying to any Withholding Entity.
  • Participating in any tender.
  • Enlisting with any organization.
  • Obtaining Bond Licence.
  • Sanction of Bank loan in favour of a registered or enlisted person.

What is VAT Certificate of Honour?

VAT Certificate of Honour is a letter of recognition issued from the VAT Online System in favour of a tax payer in VAT Form- 18.5 after he submits tax returns of VAT or Turnover Tax for all Tax Periods during the concerned one year.

How can I obtain a Certificate of Honour?

A Certificate of Honour will be issued within the following one month of completion of the Financial Year in VAT Form- 18.5 on submission of tax returns of VAT or Turnover Tax for all Tax Periods during the concerned Financial Year. This will not require any application. VAT Online System will transmit that automatically. Validity of this Certificate of Honour will remain in force for the next one year.

What are the advantages of having a Certificate of Honour?

Through a Certificate of Honour under the VAT law, any individual may    take advantage of the following, e.g. –

  • Renewal of Import Registration Certificate and Export Registration Certificate.
  • Supplying to any Withholding Entity.
  • Participating in any tender.
  • Enlisting with any organization.
  • Renewal of bond Licence.
  • Sanction/ renewal of Bank loan.
  • Registration of immovable property, etc.

Moreover, under the Tax Payer Motivation Programme, various social facilities may be obtained, e.g.,-

  • Discount in different hospitals, hotels, restaurants, super shops, branded shops, air tickets, etc. and
  • Priority in having different services, etc.

How shall I reckon Annual Turnover in my business?

You will reckon annual Turnover in your business by adding the whole amount of money as received from goods manufactured at, imported to or purchased by your business concern or the sum received there from taxable services during the period of 12 (Twelve) months.

Method of calculating yearly business turnover in case of obtaining registration:

  • In case of running business: calculating turnover during the last 12 months starting from the last day of the preceding month (tax period).

Supposedly, January 2017 is the current month, calculating from 31 December 2016, the last day of the preceding month, turnover should be determined for a period of the last 12 months, i.e., from 1 January 2016 to 31 December 2016.

  • In case of new business:  (a) on the basis of actual turnover, estimating net turnover for the next 12 months starting from the first day of the preceding month (tax period).

That is, in order to register my wholly new business concern, I shall calculate the net turnover for the next 12 months starting from the first day of the preceding month.

Example: Supposedly, you are going to start a new business with effect from the month of January 2017. At this stage, calculating from 1 December 2016, the first day of the preceding month, turnover should be determined for a period of the next 12 months, i.e., from 1 December 2016 to 30 November 2017.

(b) on the basis of estimated turnover, if the person liable to be registered presupposes that he will cross the registration threshold, estimating net turnover for the next 12 months, starting from the first day of the next month of the month (tax period) in which he will examine probability of his registration, in that case, he has to procure registration for VAT.

How can I be registered or enlisted?

For registration or enlistment, you have to apply to the concerned commissioner in form VAT 2.1 for registration or enlistment.

After verification of documents and information The commissioner shall enlist or register within 3 (three) working days and issue a Business Identification Number in VAT 2.3 from in your favor. One can get the registration certificate Online or can get from VAT Online help centre as hard copy.

I am the head of a group of companies which comprises a number of different companies.…

Single registration is enough for all companies/Branch under a group (if same economic activity).This is called central registration. If separate branch take separate registration, separate accounts must be maintained.

My company has a number of branches. I have been operating business obtaining separate BINs for…

Value Added Tax and Supplementary Duty Act, According to Section 5 of 2012, there is no need for separate registration for each branch of the same company, Business operations can be managed with a single registration.

Can the Commissioner register or enlist me on his own?

If the Commissioner, upon proper verification, considers you liable for registration, he can, in that case, register or enlist you, on his own.

Shall registration or enlistment have to be obtained for economic activities exempt under the purview of…

There is no need for obtaining registration or enlistment for exempted economic activities.

Can I obtain voluntary registration even if I operate business under the purview of exempted economic…

Yes, you can.

How can I alter information provided during registration or enlistment?

If you like to make any kind of alteration in the information provided during registration or enlistment, you can do it by yourself, but the Commissioner must be informed online par VAT-2.6 Form within 15 (Fifteen) days of the alteration in information.

How can I transfer address of my business concern from one place to another?

You can change place of your business concern by applying to the Commissioner in VAT-2.7 Form, 15 (Fifteen) days before transfer of the place of business, subject to justification of such application.

What documents should be submitted during registration or enlistment?

No documents shall be required to be submitted during registration or enlistment. Application for VAT registration or enlistment shall have to be submitted in VAT- 2.1 Form (in applicable cases, in Form VAT-2.2).

Can registration be obtained in any residential area?

There is no geographical limitation for registration under the VAT law. Under the new procedure, no Trade Licence or any such document shall also be required for obtaining registration. Registration will be granted on the basis of Postal Codes. Therefore, registration can be obtained from any place in Bangladesh.

Can I alter from Enlistment to Registration or from Registration to Enlistment?

Yes, you can. You can alter from Enlistment to Registration on the basis of Annual Turnover threshold, i.e., in case the enlisted Annual Turnover threshold exceeds Taka 8 million. And you can alter from Registration to Enlistment, in case the Annual Turnover threshold of the registered business concern exceeds Taka 3 million but stands within or below taka 8 million.

What are the Forms concerned with Registration or Enlistment?

The Forms concerned with Registration or Enlistment are as follows:

Sl No Description Form No
1 Central registration / enlistment 2.1
2 Branch registration 2.2
3 Value Added Tax registration certificate / Turnover tax enlistment certificate 2.3
4 Value Added Tax registration / Turnover tax enlistment revocation and application for alteration of tax-nature. 2.4
5 Value Added Tax registration / Turnover tax enlistment revocation- final return. 2.5
6 Post registration / enlistment information alteration or addition of new information- intimation to the Commissioner 2.6
7 Application for transfer of place of business concern 2.7

Where to submit application for registration or enlistment?

Application for registration or enlistment shall have to be submitted at the following places:

  • Web Portal of Online Board.
  • Central Information Processing Centre run by the Board.
  • Any Customs, Excise and VAT Commissionerate or Departmental Office, which may be convenient for the applicant.
  • Any service centre specified by the Board or the concerned Commissioner.
  • Any fair conducted by the Board or the concerned Commissioner.
  • Any other place ordered by the Board or the concerned Commissioner.

Is there any scope for application online for registration or enlistment?

Yes, there is. Online based application shall be the main medium of registration or enlistment. In case of online application registration will be available instantaneously.

Is the Registration or Enlistment Certificate required to be displayed?

Yes, it is required. Display the Registration Certificate or Turnover Tax Certificate or their attested copies in such a manner so that the same can be easily visible by all.

How can I revoke my Registration or Enlistment?

You can apply before the Commissioner in VAT-2.4 Form in case any situation arises for revocation of Registration or Enlistment of your business concern. The Commissioner shall direct to furnish final return within 15(Fifteen) days if he considers reasonable, causes for revocation of registration after suspending the registration or enlistment for the time being. The Commissioner shall revoke registration or enlistment within 15(Fifteen) days of furnishing final return, subject to receiving information properly.

What are the differences between provisions in the old and the new law in respect of…

The differences between provisions in the old and the new law in respect of registration and enlistment are as follows:

The Value Added Tax Act 1991 The Value Added Tax and Supplementary Duty Act 2012
  • The main basis of registration or enlistment is geographical location.
  • If a company maintains more than one branch units, more than one registration is generally applicable.
  • During transfer of input or produced goods from one branch of a business concern to another, artificial supply has to be created, as tax has to be paid showing supply.
  • An institution having more than one registration, each unit of it is considered as separate individuals and every branch has to maintain separate accounts including payment of VAT, they have separate audits also.
  • BIN with 11 digits would be issued from which Commissionerate, Circle could be evident.
  • BIN is changed immediately after change in address of the business concern.
  • Many a kind of documents were required for the purpose of registration.
  • Registration or enlistment was issued from the departmental office.
  • The main basis of registration or enlistment is the method of maintenance of accounts for the institution.
  • Even if a company maintains more than one branch units, a single registration is generally applicable.
  • During transfer of input or produced goods from one branch of a business concern to another, artificial supply need not be created, as that is not considered as supply.
  • An institution having a single registration for more than one branch unit, each unit of it is not considered as separate individuals and every branch need not maintain separate accounts including payment of VAT, rather needs to maintain accounts for the concerned branch only.
  • BIN with 9 digits are issued from which Commissionerate, Circle can’t be evident.
  • BIN is not changed even if address of the business concern is changed.
  • No documents are required for the purpose of registration.
  • Registration or enlistment is issued from the Commissionerate Office.

What shall I do in case the Registration or Enlistment Certificate is lost or destroyed?

If the VAT Registration Certificate or the Turnover Tax Enlistment Certificate is lost or destroyed, you can once again take a printout from the VAT Online System or print the same from the previous email sent to you. In whatever manner you apply, either online or through papers, registration will be created from the Online System.

What will be the method of re-registration or re-enlistment of the currently registered or enlisted tax…

Individuals registered or enlisted under the purview of the Value Added Tax Act 1991 shall have to be re-registered or re-enlisted under the new law.

What is the method of application online?

You can apply for online registration in accordance with the following methods:

Step-1:  At first visit www.nbr.gov.bd . Select Online VAT Registration option. You reach VAT Online Portal.

Step-2:  Create first, User ID and Password there in the name of the individual liable to be registered or enlisted.

Step-3:   Enter into the VAT Online System using the User ID and Password and after selecting Registration option, submit VAT- 2.1 Form, duly filled in. 

Step-4:  If the submission is correct, VAT Registration Certificate or Turnover Tax Enlistment Certificate will be created. You will get that from the System. That will also be sent to your email.

NB:  Before furnishing any online application, please go through the relevant practical guide from the website of the NBR. Moreover, you can train yourself from www.nbrelearning.gov.bd in order to learn more in details including watching relevant video films.

Chapter 3

Levying Tax

What is the rate of Tax applicable in Bangladesh?

The rates of Tax applicable in Bangladesh are as follows:

  • The standard rate of VAT in Bangladesh is 15%.
  • Export 0%.
  • Turnover Tax applicable to turnover tax payer up to Taka 8 million is 3% (VAT is not applicable to them).
  • Supplementary Duty at different rates on luxury goods and various services.
  • No other lower rates.

Where VAT is levied?

VAT is levied on all taxable imports and taxable supplies.

Who pays VAT under which cases?

VAT is paid by –

  • In case of import- the importer.
  • In case of taxable supply in Bangladesh- the supplier.
  • In case of sale of goods by auction bidder – the auction bidder.
  • In case of withholding at source- the withholding authority.
  • In case of importing service- the service recipient.

Which supplies shall be considered to be delivered in Bangladesh?

Supply by any resident individual or supply by any non-resident individual from a specified place in Bangladesh shall be considered to be delivered in Bangladesh.

Who is a non-resident individual? How shall he operate business in Bangladesh?

An individual who is not a resident is a non-resident individual. In this case a resident individual is he who-

  • Resides in Bangladesh in the ordinary course of business, or
  • Resides in Bangladesh for over 182 days during the current calendar year, or
  • Resides in Bangladesh for over 90 days of any calendar year and resides in Bangladesh for over 365 days within the preceding four years of the said calendar year.

If any non-resident individual likes to operate economic activity from a particular place in Bangladesh, he will operate his economic activity or business by appointing a VAT agent.

What is the minimum prerequisite of a VAT agent?

The VAT agent must have one or more of the following prerequisites:

  • VAT consultant appointed under Section 130 of the law.
  • Registered member of the Institute of Chartered Accountants of Bangladesh (ICAB); or
  • Registered member of the Institute of Cost and Management Accountants of Bangladesh (ICMAB); or
  • Any lawyer registered as member of the Bangladesh Bar Council; or
  • Any retired officer of the Value Added Tax department who is not below the rank of Assistant Commissioner; or
  • A specialist businessman representative from the private sector, nominated by the FBCCI.

How a non-resident individual shall appoint a VAT agent?

The nonresident individual furnish all data in form Mushok 3.4 to the commissioner about the agent. If all information found correct, the VAT system shall notify the agent for his or her consent. If the agent gives consent, the appointment of agent will be effective.

What is the responsibility of a VAT agent?

A VAT agent shall perform, on behalf of a non-resident individual, the following activities under the Value Added Tax and Supplementary Duty Act 2012, namely:

  • Registration.
  • Return submission.
  • Tax payment.
  • Import and export.
  • All activities related to VAT including audit activities.

What is Reverse Charge? In which case is this applicable?

Reverse charge is applicable to service recipient at import level. Reverse charge is realizing tax from the service recipient in case of imported service. For example Company A will import software through internet as service; At the time of payment through banking channel Company will pay VAT and the same time he can adjust it against output tax.

What is Zero Rated Supply?

The following supplies are zero rated supply:

  • Supply of immovable properties located outside Bangladesh,
  • Supply of goods in order to export.
  • Supply of service rendered outside Bangladesh.
  • Temporarily imported goods (the goods will be sent back after fulfillment of purpose).
  • Supply of service rendered to international transport.

Supply of which services are Zero Rated?

Supply of the following services shall be Zero rated:

  • Supply of service rendered outside Bangladesh.
  • Supply of service rendered to international transport.
  • Service rendered to repair, reconstruction, maintenance, alteration work, etc. of temporarily imported goods.
  • Supply in favor of goods with warranty of repair or replacement.
  • If any individual imports any goods with warranty, in that case if the same is sent to the exporting country for repair or replacement within the time of warranty, all related service shall be of zero rated.

Which supplies are exempt?

The following supplies shall be exempt from VAT:

  • Any supply or import specified in the First schedule.
  • Supply in respect of right of receiving exempt supplies or future right of purchase or sale.

In other words, supply of goods or services as specified in the First Schedule shall be exempt. A list of exemption is given in the First Schedule in respect of basic needs (food, medicine, education, etc.), agriculture, immovable property, culture, etc.

Chapter 4

Tax Realization

Is VAT applicable on import?

Yes VAT is applicable to all imported goods and services. But it will not impose on goods and services mentioned in the exemption schedule.

How VAT impossible price and tax are determined in case of import?

VAT imposable price has to be determined adding all taxes with imposable Import Duty (except VAT and advance Income Tax).

In case of imported goods, if no tax other than Import Duty is levied, value on which Import Duty is imposable, shall be the VAT imposable price of the said goods or service.

In case of import VAT has to be assessed multiplying 15% directly on the VAT imposable value.

  • At the import level, in addition to Import Duty, Supplementary Duty, Regulatory Duty, etc. are applicable in particular cases, in accordance with the nature of import.

Method of VAT assessment at import level:

VAT imposable Value = Supplementary Duty Imposable value + supplementary Duty

Supplementary Duty imposable value = Dutiable Value + Import Duty + Regulatory Duty + Other Duties

Advance Tax imposable value = VAT imposable value                                                              

 Example: 25% Import Duty (ID), 3% Regulatory Duty (RD), 20% Supplementary Duty (SD), 15% VAT, 3% Advance Tax (AT), 5% Advance Income Tax (AIT) are already levied on import of any goods. At the import stage the of the goods consignment its Dutiable Value (DV) stands at Taka 50,000.00. Let us assess the base value for any tax at import stage and the amount of applicable duty-tax.

Tax

Formula of Base Value

Base Value

Rate

Duty-Tax

Import Duty

DV

50,000.00

25%

12,500.00

Regulatory Duty

DV

50,000.00

3%

  1,500.00

Supplementary Duty

DV+ ID+ RD

64,000.00

20%

12,800.00

VAT

DV+ ID+ SD+ RD

76,800.00

15%

11,520.00

Advance Tax

DV+ ID+ SD+ RD

76,800.00

3%

   2304.00

Advance Income Tax

DV

50,000.00

5%

  2,500.00

                                                                                                      Net Duty-Tax      40,624.00

What is Advance Tax? What is the rate of Advance Tax? Is Advance Tax adjustable?

Advance tax is tax paid by registered, on registered and enlisted person on the imported merchandise at the time of import.

The rate of Advance tax is 3 percent.

Yes Advance tax is adjustable in the Return( It will be decreasing adjustment)

If the advance tax be paid by the non registered person or non listed person, he can claim it to the commissioner.

How the Advance Tax paid by the unregistered importer shall be reimbursed?

If the unregistered importer happens to be the last consumer of the imported goods, he will be entitled to have the paid Advance Tax reimbursed.

The importer, within 60 days of paying Advance Tax, shall apply online in VAT Form-4.1 before any Commissioner nearby, for such reimbursement. If the application is found correct, the Commissioner, within 15 days, shall reimburse and arrange reimbursement to the applicant through cheque or transferring money to his bank account. Application for reimbursement of Advance Tax can only be submitted online.

How value of the supply shall have to be assessed?

The actual value of supply shall be considered as base value for calculating VAT.

  • Value shall be the value obtained from the consideration of taxable supply deducting equal amount of money as tax fraction of the said consideration-
  • In case of imported service supply value will be the taxable supply value.
  • In other cases supply value will be the value obtained deducting tax fraction from the reasonable market value.
  • All values shall be VAT inclusive.
  • The amount of VAT shall be assessed multiplying by tax fraction.
  • Example:  Supposing, value of foodstuff at a restaurant of a businessman is Taka 300.
  •  In that case the amount of VAT will be: 300 X tax –fraction = 300 X 15/115 = Taka 39.13.
  • Value of supply will be Taka (300- 39.13) = Taka 260.87.

At which stage of supply VAT becomes payable?

In cases of taxable supply, VAT shall be payable in the event of any of the following activities whichever occurs first-

  •  In case of ordinary supply-
  • When supply is delivered.
  • When invoice will be issued.
  • When value of supply will be received in full or in part.
  • In case of progressive  or periodic supply-
  • Separate invoice is issued against each.
  • When value of goods in part or in full will be received against each.
  • Value becomes payable.
  • When payable sum can be ascertained.

When tax has to be paid to the Government Treasury?

Tax has to be paid within 15 days of the following month of each Tax Period.

What is progressive or periodic supply?

Progressive or periodic supply is:

  • Any supply under any contract under conditions of progressive or periodic payment of money.
  • Any supply under any lease, hire purchase (including lease finance).

Any directly provided supply on construction or engineering activities, building reconstruction or extension work.

How tax is levied on single and multiple supplies?

In case of single and multiple supplies, tax will be levied in the following manner:

  • Each supply will be considered as separate and independent.
  • Supply having characteristics of a single supply can’t be divided artificially.
  • If the supply consists of one or more ingredients, the same will be a single supply and the other ingredients shall be considered as part of the said single supply.
  • Any supply shall be considered as ancillary to the original supply.

What will be the effect of VAT if salary of the staff is paid by produced…

If salary of the staff is paid in full or in part by produced goods or supply-worthy service instead of Taka that will be considered to have been utilized for personal purposes of the supplier and VAT on the said goods or service shall be applicable on the basis of reasonable market price.

How VAT can be paid when value is paid in installments?

In case of paying value in installments, tax will be imposed on that amount of money on which installment has been paid. VAT shall be applicable in pro rata basis on the given money.

Who is the middleman in telecommunication?

A telecommunication middleman is a distributor, agent or individual to whom telecommunication goods are supplied along with rebate on value of the goods paid in advance, by any supplier of telecommunication goods or service.

What are the telecommunication goods on which value is paid in advance?

Telecommunication goods having value paid in advance are the telecommunication goods in which cases their value have been paid in advance by any telecommunication supplier through his agent.

Who is the supplier of telecommunication?

The original supplier of the telecommunication service is the supplier of telecommunication. No telecommunication middleman shall be included in it.

Is lottery or lucky draw taxable?

According to law, conducting lottery, lucky draw, housie, raffle draw or any such enterprise is taxable. If any individual sells ticket to a distributor or an agent giving rebate on the value of it in order to conduct lottery or lucky draw, actual value of the same shall have to be determined without considering the rebate, which will be taxable. That is, final consideration of the sold ticket shall be the value of the ticket.

What will be the consequence if any supply is annulled?

If any supply cancelled and in case of return, the supplier can make an decreasing adjustment of the returned portion of the supply. And, the supply will issue a credit note also.

How tax shall be realized from teller machine during sale of goods?

In cases where supply of taxable goods is delivered though teller machine, meter or any such automatic machine (except payment by telephone), in such cases deals are conducted by the supplier or his coin, currency and token, tax shall be payable while such coin, currency or token is released by the supplier or his agent from such teller machine, meter or automatic machine.

In cases where taxable supply is delivered through teller machine, meter or any other automatic machine, and money is paid for such supply in the prescribed manner, in such cases tax shall have to be paid during payment of money to the supplier by the supplying individual.

Chapter 5

Net Tax Assessment

How shall we calculate Net Tax?

You will calculate Net Tax in accordance with the following method:

  •  By adding all output tax and supplementary duty and all increasing adjustment payable during the tax period and deducting from the sum total all input tax and all decreasing adjustment during the tax period.
  • Therefore, Net Tax = Output Tax + Increasing Adjustment – Input Tax – Decreasing Adjustment.
  • Supposing, Output Tax = 2000/-

Input Tax = 1400/-

Increasing Adjustment = 300/-

Decreasing Adjustment = 200/-

Therefore, Net Tax = (2000 + 300 – 1400 – 200)/-

= 700/-

Is it mandatory to deposit Net Tax to the Treasury before submitting Return?

It is mandatory to deposit Net Tax to the Treasury before submitting Return. But it may be mentioned here that whenever tax becomes payable during any time of the concerned tax period, the tax payer can at any time pay the amount to the Treasury before submitting the Return, retaining that tax amount in hand. It is noteworthy that if the amount of Net Tax is positive and Return is submitted without paying the tax, interest will be calculated after the 15th of the next month following the concerned tax period and pecuniary penalty shall also be imposed for violating the law.

What is Input Tax Credit?

Credit is deducting or adjusting paid VAT during purchase by the taxpayer from the VAT realized from the buyer during supply. As for example, supposing, a tax payer has realized Taka 39.13 as VAT by delivering a supply of Taka 300, for that particular supply, he has purchased input worth Taka 200. He has paid Taka 26.07 there as VAT.  He will deposit the residual sum of Taka 13.06 (39.13 – 26.07) to the Government Treasury after adjusting paid up Input Tax (Taka 26.07) at purchase level from tax realized (Taka 39.13) at sale level.

What are the conditions of availing Credit?

The conditions of availing credit are:

  •  The supply activities must be performed in the process of economic activities.
  • In the case of supply the individual will pay the consideration for supply or shall be liable to pay the same.
  • If the value of taxable supply exceeds Taka 100,000.00, the amount in part or in whole as against the supply shall have to be paid up through banking channel.
  • In case of supply valid Tax Invoice (Form VAT-6.3) shall be required and in case of import there shall be Bill of Entry including Release Order.

Under which time frame Credit has to be availed?

Tax Credit has to be availed during the concerned Tax Period or within the following 2 Tax Periods within which Tax Period the import or sale is undertaken

Which documents are required for availing Credit?

In order to avail Credit the only required document is the Tax Invoice (VAT-6.3). But in case of import, the Bill of Entry shall be considered as Tax Invoice.

Is there any scope for availing partial Input Tax credit?

Yes, there is scope for availing partial Input Tax credit. If partial consideration is paid for taxable supply, or if the entire supply raised by accrued input does not become taxable, in such circumstances partial Input Tax Credit may be availed.

What is meant by partial Input Tax credit?

If any individual is not entitled to avail Input Tax Credit in full against import or accrual during a Tax Period, the portion he will be entitled to avail as credit according to law, that portion may be termed as partial Input Tax Credit. If partial consideration is paid up without paying the consideration in full for taxable supply, or if the entire supply is raised by accrued input does not become taxable, partial Input Tax Credit may be availed. Partial Input Tax Credit shall be applicable when exempt goods and taxable goods both are produced using imported or accrued raw materials.

Under which circumstances partial Input Tax Credit may be available?

If any individual is not entitled to Input Tax Credit in full against import or accrual during any Tax Period, Input Tax Credit shall be available on the applicable portion in accordance with the law and rules. Partial Input Tax Credit shall be available in the following circumstances:

  • Partial Input Tax Credit shall be available, if the entire supply raised by accrued input does not become taxable.
  • Supposing, the entire value of the taxable and exempt supply of an institution during a specified time stands at Taka 9000/- (taxable supply- 6000/- and exempt supply- 3000/-). If raw materials worth Taka 6300/- are used for production of the said supplied goods, the amount of creditable tax shall be:
  • Net Input Tax = 6300 X 15/115

= 821.74

  • Net Taxable Supply = 6000/-
  • Net Supply = 9000/-
  • Therefore, partial Input Tax Credit:

= Net Input Tax X Net Taxable Supply/ Net Supply

= 821.74 X 6000/ 9000

= 821.74 X 0.6667

= 547.85/-

What is Adjustment?

Adjustment is a process to translate the economic activities in tax liability or tax impact. The impact could be decreasing adjustment or increasing adjustment.

What are the Incidents of Adjustment?

Incidents of Adjustment are:

  • Increasing or decreasing adjustment of deducted tax at source.
  • Increasing or decreasing adjustment, applicable owing to revision of annual accounts.
  •  Increasing adjustment owing to non-payment of money through banking channel.
  • Increasing adjustment in case of goods used for personal purpose.
  • Increasing adjustment in case of Registration, Input Tax and VAT.
  • Increasing adjustment in case of Annulment of Registration.
  • Increasing adjustment in respect of payment of interest, fine, pecuniary punishment, fees, etc.
  • Decreasing adjustment in respect of second hand goods purchased for resale.
  • Decreasing adjustment in respect of insurance.
  • Decreasing adjustment in cases of lottery, lucky draw, raffle draw, housie and similar other activities.
  • Decreasing adjustment in case of change in rate of tax.
  • Decreasing adjustment in order to carry forward negative balance from the preceding tax period.
  • Decreasing adjustment in respect of additional VAT paid during the preceding tax period.
  • Any other specified increasing or decreasing adjustment.

How many types of Adjustment are there in the VAT System?

In the new VAT System there are two types of Adjustments, e.g.,

  • Increasing Adjustment.
  • Decreasing Adjustment.

What is the difference between incident of Increasing Adjustment and incident of Decreasing Adjustment?

When a business or economic activity increases the tax liability its called increasing adjustment and when the business activity decreases the tax liability its decreasing adjustment.

Who are the Withholding Tax Entities?

The Withholding Tax Entities are:

  • Any Government Entity, that is,
  • (a) The Government or any of its Ministry, Division, or Office;
  • (b) Any Semi Government or Autonomous Organization;
  • (c ) Any State owned Institution;
  • (d) Local Authority , Council or any similar Organization;
  • Any Non Government Institution affiliated with the NGO Affairs Bureau or the Department of Social service.
  • Any Bank, Insurance Company or similar financial representative.
  • Any Post Secondary Educational Institution.
  • Any Public Limited Company.
  • Institution under the Large Tax Payers Unit (Value Added Tax).

What type of documents will be required for Adjustment?

Following are the documents concerned with the Adjustment Incident:

  • Withholding Tax at Source Certificate (VAT-6.6)
  • Credit Note (VAT-6.7)
  • Debit Note (VAT-6.8)

What is Withholding Tax at Source?

Withholding Tax at Source is a process which denotes that when any institution other than an institution withholding tax at source delivers supply amounting to a value over Taka 10 (Ten) thousand under a contract, tender or work order, to any institution withholding tax at source, during payment of the bill, shall withhold a maximum amount of one third of the applicable tax and the withholding tax at source authority shall be liable to deposit the sum to the Government Treasury.

Is Withholding Tax at Source an incident of adjustment?

Yes, Withholding Tax at Source an incident of adjustment. Withholding Tax at Source may take place in both increasing and decreasing orders.

As for example, supposing, an institution, namely, ‘A’ delivers a supply amounting to a value of Taka 100,000/- to an institution, namely, ‘B’ Limited (Withholding Tax at Source Institution, according to the provisions of Section 2(11) of the law).

In this case, ‘B’ Limited institution shall withhold at source, a minimum amount of one third of the applicable VAT while paying the value. The ‘B’ Limited institution shall withhold at source, Taka 4347.82, i.e., one third of Taka 13,043.48, the applicable VAT on Taka 100,000/-. As the law provides for withholding at source a minimum amount of one third, therefore, if the ‘B’ Limited institution so desires, it may withhold at source, any amount of money below Taka 4347.82.

However, if Taka 4347.82 is withheld at source by the ‘B’ Limited institution, at the end of the Tax Period, it will add Taka 4347.82 to its applicable tax as Increasing Adjustment and the ‘A’ institution will  deduct Taka 4347.82 from its applicable tax as Decreasing Adjustment.

What type of adjustment has to be made for withholding tax at source in the cases…

According to the provisions of Section 48 of the Value added Tax and Supplementary Duty Act 2012, withholding tax at source is both increasing and decreasing adjustment. As the buyer, while taking delivery of the supply, shall withhold tax at source from the supplying institution, it is deemed to be increasing adjustment as withholding at source in the case of the buyer, in the case of the other supplier it is decreasing adjustment as withholding at source.

As for example, supposing, an institution, namely, ‘A’ delivers a supply amounting to a value of Taka 100,000/- to an institution, namely, ‘B’ Limited (Withholding Tax at Source Institution, according to the provisions of Section 2(11) of the law).

In this case, ‘B’ Limited institution shall withhold at source, a minimum amount of one third of the applicable VAT while paying the value. The ‘B’ Limited institution shall withhold at source, Taka 4347.82, i.e., one third of Taka 13,043.48, the applicable VAT on Taka 100,000/-. As the law provides for withholding at source a minimum amount of one third, therefore, if the ‘B’ Limited institution so desires, it may withhold at source, any amount of money below Taka 4347.82.

However, if Taka 4347.82 is withheld at source by the ‘B’ Limited institution, at the end of the Tax Period, it will add Taka 4347.82 to its applicable tax as Increasing Adjustment and the ‘A’ institution will  deduct Taka 4347.82 from its applicable tax as Decreasing Adjustment.

What are the features of withholding tax at source?

Following are the features of withholding tax at source:

  • Withholding tax at source shall be applicable in cases of purchase under contract, tender or work order.
  • Withholding tax at source shall not be applicable in cases of supply occurred between two entities of withholding tax at source.
  • Withholding tax at source shall not be applicable in cases of purchase up to Taka 10 thousand par single invoice.
  • Withholding tax at source shall not be applicable in exempt or zero rated cases of supply.
  • The withholding entity shall withhold a maximum of one third of the applicable VAT.
  • No withholding individual shall receive from any unregistered individual any supply which is liable to be withheld at source.

Shall withholding tax at source be applicable in case supply occurs between two entities of withholding…

No.

Shall withholding tax at source be applicable in case value of a single purchase amounts up…

No.

How the withholding tax at source entity shall issue the adjusted tax invoice and the certificate…

Within the purview of withholding at source, any institution other than any institution withholding tax at source, during delivering supply over a value of Taka 10 (Ten) thousand, under contract, tender or work order, to any withholding tax at source entity, shall supply par VAT-6.3 invoice. In that case, he will fill in the concerned portion of the VAT-6.3 in respect of withholding at source which will be considered as adjusted tax invoice for withholding at source. The withholding at source entity, after withholding at source, shall issue certificate of withholding tax at source in Form VAT-6.6. The supplier, on the basis of certificate received in Form VAT-6.6, shall commit a decreasing adjustment and the withholding entity at source shall commit an increasing adjustment.

Chapter 6

Account Maintenance

Which documents shall have to be preserved in order to maintain accounts?

The following documents shall have to be preserved in order to maintain accounts, namely:

  • Purchase ledger book
  • Sale ledger book
  • Tax invoice
  • Contractual output invoice
  • Goods transfer invoice
  • Certificate of withholding tax at source
  • Credit note- debit note
  • Documents related to adjustment
  • Returns, etc.

Which principles of account maintenance are followed by the new VAT System?

There are two methods or principles of account maintenance, namely:

  • Cash based
  • Accrual based

There is no scope of arrear accounts in case of cash based principle of transaction. On the other hand scope of account maintenance exists in accrual based transaction even without paying in cash. In business transactions arrear must be there, therefore, in all business concerns, accrual based methods or principles are followed. Hence, the new VAT law also follows the accrual based principle.

How long should I maintain documents related to VAT?

The VAT related documents should be maintained up to 5(Five) years in order to facilitate assessment of tax.

Whether any documents should be sent regularly to the VAT office?

No documents other than the Tax Payer’s Return (Form VAT-9.1 or 9.2) and purchase-sale information (Form VAT-6.20) are required to be sent to the VAT office.

Can I maintain all of my accounts in digital method?

Yes, you can maintain all of your accounts in digital method. In such case there is no need of maintaining hard copy along with the digital method simultaneously. But if you so desire, you may also maintain copy manually along with the digital method simultaneously.

What is Tax Invoice?

Tax Invoice is the numerical series of documents comprising specified information and data of the supplier in respect of his taxable supply. Form VAT-6.3 shall be considered as the tax invoice. The tax invoice shall consist of the following information:

  • Name of the purchaser
  • Invoice number
  • BIN Number of the seller
  • BIN Number of the purchaser (in applicable cases)
  • Details of the supply
  • Quantity of the supply
  • Value
  • Tax involved

How can I fill in a tax invoice?

According to the rules under the Value Added Tax and Supplementary Duty Rules 2016, the supplier shall issue tax invoices against each supply in Form VAT-6.3. The Instructions to fill in Tax Invoice must be followed in order to issue correct Tax Invoice.

In case of contractual output what type of invoice shall I use?

In case of contractual output you can use VAT-6.4 Form.

Which invoice should be used in case of transferring goods from one Section to another Section…

I shall use Form VAT-6.5 in case of transferring economic activity related goods from one Section to another Section under the Central Registration System.

What is the Adjusted Tax Invoice and Withholding Tax at Source Certificate?

According to the provisions of Section 53 of the Value added Tax and Supplementary Duty Act 2016, the invoice to be delivered to the Withholding Tax at Source Entity by the Supplier on or before the date of supply, shall be called the Adjusted Tax Invoice and Withholding Tax at Source Certificate. Form VAT-6.3 and Form VAT-6.6, combined together are considered to be ‘’Adjusted Tax Invoice and Withholding Tax at Source Certificate’’.

For maintaining accounts is it mandatory to use the Format mentioned in the Rules?

No, for maintaining your accounts, it is not mandatory to follow the Format in tact as mentioned in the Rules. You can arrange the format according to your own choice in order to cater to the need of your business concern. In that case one point should be kept in mind that the information which appears in the Rules should also be there in your own format.

Is any permission from the VAT office required for maintaining accounts in own format?

No.

Is separate accounts are required to be maintained for VAT along with maintaining own account simultaneously…

No. There is no scope in the new law to maintain two types of accounts. The accounts of your business concern shall be considered as the account of VAT. You have to maintain only one account.

Chapter 7

Supplementary Duty

What is supplementary duty?

According to Section 55 of the Value Added Tax and Supplementary Duty Act, 2012-

  • On import of supplementary duty-imposed products
  • On supply of supplementary duty-imposed products prepared in Bangladesh;
  • Tax surplus duty imposed on supply of supplementary taxable services to Bangladesh

Adult supplements are generally applicable for the goods or services that are generally meant for luxury or discouragement.

When Supplementary Duty is levied?

According to the provisions of the Value Added Tax and Supplementary Duty Act 2016-

  • At the time of import, in case of import of goods on which Supplementary Duty is imposable.
  • At the time of supply of goods and service on which Supplementary Duty is imposable in Bangladesh, Supplementary Duty shall be imposed.

Who will pay the Supplementary Duty?

The Supplementary Duty shall be levied-

  •  In case of import on which Supplementary Duty is imposable; an
  • The supplier of service shall pay the Supplementary Duty in case of supply of goods manufactured in Bangladesh on which Supplementary Duty is imposable or in case of supply of service on which Supplementary Duty is imposable.

How value shall be determined for Supplementary Duty?

Value shall be determined for levying Supplementary Duty in the following method:

  • In case of import, adding Import Duty and Regulatory Duty (if any) with the value of the imposable Import Duty.

Supplementary Duty imposable value = Dutiable Value/ value of the imposable Import Duty  + Import Duty + regulatory Duty + other taxes

25% Import Duty (ID), 3% Regulatory Duty (RD), 20% Supplementary Duty (SD) have been levied on import of a certain goods.  Assessable Value (AV) of consignment of the goods at import level is Taka 50,000.00. Let us assess Base Value and the amount of applicable Supplementary Duty to levy Supplementary Duty at import level.

Tax Theory of Base Value Base Value Rate Duty- Tax
Import Duty DV 50,000.00 25% 12,500.00
Regulatory Duty DV 50,000.00 3% 1,500.00
Supplementary Duty DV+ID+RD 64,000.00 20% 12,800.00
  • Reasonable market value of the supply shall be the Base Value of realizing Supplementary Duty in cases of supply of goods or service on which Supplementary Duty is imposable.

Example: Supposing, market value of a certain goods inclusive of Supplementary Duty is Taka 300. In this case VAT and Supplementary Duty are included in the value of the goods.  The rate of Supplementary Duty is 10%.

Therefore, VAT imposable value = Supplementary Duty imposable value + Supplementary Duty.

VAT imposable value = (300 – 300 X tax- fraction) Taka

= (300 – 300 X 15/ 115) Taka

= (300 – 39.13) Taka

= 260.87 Taka

Supplementary Duty imposable value + Supplementary Duty = 260.87 Taka

Therefore, Supplementary Duty imposable value shall be available after deducting Supplementary Duty from Taka 260.87.

 Supplementary Duty imposable value = (260.87 – 260.87 X tax- fraction) Taka

= (260.87 – 260.87 X 10/110) Taka

= (260.87 – 24.35) Taka

= 236.52 Taka

On which imports and supplies Supplementary Duty is applicable? Narrate the list along with the applicable…

Supplementary Duty is applicable on import and supply of goods and services as specified in the Second Schedule. The list along with the applicable rates is given below: 

List of Supplementary Duty imposable goods

Heading Number HS Code Base Value Rate(%) or amount of Supplementary Duty
(1) (2) (3) (4)
21.06 2106.90.10 Materials used for manufacturing soft drinks other than blending of perfumery, volume based alcohol of an alcoholic strength over 0.5% volume. 350
22.02 2202.10.00 Soft drinks 100
2202.90.00 Non- alcoholic beer 100
22.03 2203.00.00 Beer prepared from malt 250
22.04 All HS Code Wine prepared from fresh grapes, inclusive of fortified wine (excluding ‘grape must’ under the heading 20.09) 350
22.05 All HS Code Wine prepared from vermouth and fresh grapes. 350
22.06 2206.00.00 Other fermented drinks (as for example, cider, Perry) 350
22.08 All HS Code Indentured ethyl alcohol of an alcoholic strength by volume of less than 80% volume, spirits, liquors and other spirituous beverages. 350
24.01 All HS Code Unmanufactured tobacco, tobacco refuse 60
24.02 2402.10.00 Cigarette, cigar and cigarillo made from tobacco. 350
2402.20.00 Cigarette made from tobacco 350
2402.90.00 Manually or non-mechanically prepared beady and others 100
24.03 All HS Code Other manufactured tobacco and homogeneous substance, ‘homogenized’ or ‘reconstituted’ essence or perfume. 100
25.15 2515.11.00 Marble and travertine (apparent relative thickness 2.5% or above), cut in a crude or coarse manner. 20
2515.12.00 Merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape. 20
2515.20.00 Ecsussine and other calcareous monumental or building stone; alabaster. 20
25.16 2516.11.00 Granite (coarsely cut) 20
2516.12.00 Granite: cut by sawing or otherwise, into blocks or slabs of a rectangular or square shape
25.23 2523.21.00 Portland cement: white, either artificially pigmented or not. 20
2523.29.00 Other Portland cement 20
2710.12.39 Other light lubricant and preparation: others. 20
2710.12.50 Other medium lubricant and preparation. 20
2710.12.69 Gas oil: others. 20
2710.19.19 Fuel oil: others. 20
2710.19.33 Partially refined petroleum, inclusive of top crude. 20
2710.19.34 Grease (mineral). 20
2710.19.39 Other heavy lubricant and preparation: (exclusive of transformer oil and heavy normal paraffin). 20
27.11 2711.21.00 Natural gas, in gaseous form 100
33.03 3303.00.00 Perfume and cosmetic water 20
33.04 All HS Code Beauty or cosmetic materials and cosmetic materials for skin treatment (other than substance used in drugs), sunscreen or sun tan materials; inclusive of nail care and pedicure cosmetic materials. 20
33.05 All HS Code Materials used for hair treatment. 60
33.07 All HS Code Materials used before, after or during shave; materials used for doing away with stinky smell from the body, depilatory and other perfumes, cosmetics and toiletries which are not mentioned or included anywhere else; room stinky smell remover (whether perfumed or not or whether having bacteria killing capacity or not). 20
48.13 All HS Code Cigarette paper, whether cut according to size or not, or booklet or in the form of tube. 60
68.02 All HS Code Granite, marble, travertine and alabaster and other stone. 60
69.04 All HS Code Ceramic building bricks, flooring blocks, support or filler tiles and the like. 20
69.07 All HS Code All dim ceramic stone plaque and oven stone or wall tiles; dim ceramic mosaic cube and similar type of goods, whether placed on any material or not. 45
69.08 All HS Code All dim ceramic stone plaque and oven stone or wall tiles; dim ceramic mosaic cube and similar type of goods, whether placed on any material or not. 45
84.15 All HS Code(except 8415.10.10 8415.81.10 8415.82.10 8415.83.10 8415.90.10 and 8415.90.90) Airconditioning machine with motorized fans and having temperature and humidity regulating facilities, and with features which can not regulate humidity separately and its spare parts (except capital equipments). 60
8415.90.10 Spare parts (imported by airconditioner manufacturing institution). 20
8415.90.90 Spare parts (imported by other importers). 45
84.18 All HS Code (except 8418.61.10 8418.69.10 and 8418.99.10) Refrigerator, freezer and similar types of goods; heat pump; refrigerating furniture. 30
85.07 8507.10.00 Lead acid battery and electric accumulator 20
8507.20.90 Other lead acid accumulators 20
87.03 All HS Code Motor car and other motor vehicles, inclusive of station wagon:  
  1. Engine auto rickshaw or three-wheeler.
20
  1. Four-stroke CNG run auto rickshaw or three-wheeler along with entirely manufactured engine.
20
  1. Entirely manufactured motor car and other motor vehicles, inclusive of station wagon (except ambulance).
 
  1. Cylinder capacity up to 1000 cc
30
  1.  Cylinder capacity from 1001 cc to 1500 cc (except microbus).
45
  1. Cylinder capacity from 1501 cc to 2000 cc (except microbus).
100
  1. Cylinder capacity from 2001 cc to 2750 cc.
250
  1. Cylinder capacity from 2751 cc to 4000 cc.
350
  1. Cylinder capacity over 4000 cc
500
  1. Cylinder capacity up to 1800 cc- microbus.
30
  1. Cylinder capacity from 1801 cc to 2000 cc- microbus.
60
  1. Detached Complete Knock Down (CKD) motor car, motor vehicle, inclusive of station wagon and jeep (except Four-stroke CNG run auto rickshaw or three-wheeler):
 
  1. Motor car (up to 2000 cc), detached (CKD).
30
  1. Other detached (CKD)
45

 

Heading Number HS Code Base Value Rate(%) or amount of Supplementary Duty
(1) (2) (3) (4)
87.04   Entirely manufactured double cabin pick up with minimum four doors:  

8704.21.13

8704.31.13

Cylinder capacity from 1001 cc to 1500 cc 30

8704.21.14

8704.31.14

Cylinder capacity from 1501 cc to 2000 cc 60

8704.21.15

8704.31.15

Cylinder capacity from 2001 cc to 2750 cc 100

8704.21.16

8704.31.16

Cylinder capacity from 2751 cc to 4000 cc 350

8704.21.17

8704.31.17

Cylinder capacity over 4000 cc 500
87.06 8706.00.31 Chassis with engine of two-stroke auto rickshaw or three-wheeler. 20
8706.00.31 Chassis with engine of four-stroke auto rickshaw or three-wheeler. 20
87.11

8711.10.1

8711.10.91

8711.20.11

8711.20.91

Entirely manufactured four-stroke motor cycle. 45

8711.10.21

8711.10.92

8711.20.21

8711.20.92

Four-stroke detached motor cycle 30

8711.10.19

8711.10.29

8711.10.99

8711.20.19

8711.20.29

8711.20.99

Two-stroke motor cycle (entirely manufactured or detached). 250
93.02- 93.07 All HS Code Revolver and pistol, other arms, ammunition (exclusive of match weapon and sports ammunition imported by Shooting Federation), 20

List of Supplementary Duty imposable services

Heading Number Service Code Services Rate(%) or amount of Supplementary Duty
(1) (2) (3) (4)
S001 S001.00 Hotel and restaurant:  
S001.10 Hotel 10
S001.20 Restaurant:
Accommodation, while serving food or drinks if alcoholic drink is served at hotel or restaurant or if ‘’floor show’’ of any kind is arranged (even if organized on a single day in the year).
10
S012 S012.20 Supplier of SIM card:
In case of cellular (Mobile or Fixed Wireless) telephones, supplying SIM (Subscriber’s Identity Module) card or RIM (Removable User Identification Module) card or any other similar kind of card with Microchip or in order to serve any other purpose, using Code Division Multiple Access (CDMA) every time or any other similar kind of method other than the above mentioned card.
20

How Supplementary Duty is realized from import?

Supplementary Duty

Example: Supplementary Duty should be realized at the same time and following the same method when and following which method Import Duty on Supplementary Duty imposable goods are realized. At import level Supplementary Duty shall be realized in the following method:

 In case of import, Import Duty and Regulatory Duty (if any) have to be added with the Import Duty imposable value.

Supplementary Duty imposable value = Assessable Value/ Import Duty imposable value + Import Duty + Regulatory Duty + other duties.

Example: Supposing, on the import of any goods, 25% Import Duty (ID), 3% Regulatory Duty, 20% Supplementary Duty (SD) have been levied. Dutiable Value of the goods consignment at import stage is Taka 50,000.00. Let us assess applicable Supplementary Duty.

Solution:

Tax Theory of Base Value Base Value Rate Duty- Tax
Import Duty (ID) AV 50,000.00 25% 12,500.00
Regulatory Duty (RD) AV 50,000.00 3% 1,500.00
Supplementary Duty (SD) AV + ID + RD 64,000.00 20% 12,800.00
Applicable Supplementary Duty 12,800.00

How Supplementary Duty is realized from supply?

Supplementary Duty is realized at the same time of supply of Supplementary Duty imposable goods or service when VAT is realized.

  •  In case of supply of Supplementary Duty imposable goods or service, the base value for realizing Supplementary Duty shall be the reasonable market value of the supply.

Example:  Supposing, market value of a certain Supplementary Duty added goods is Taka 300. In this case, VAT and Supplementary Duty are added with the value of the goods. The rate of Supplementary Duty is 10%.

Therefore, VAT imposable value =   Supplementary Duty imposable value + Supplementary Duty

VAT imposable value = (300 – 300 X Tax- fraction) Taka

= (300 – 300 X 15/115) Taka

= (300 – 39.13) Taka

= 260.87 Taka

Supplementary Duty imposable value + Supplementary Duty = 260.87 Taka

Therefore, value of the goods inclusive of Supplementary Duty = 260.87 Taka

Supplementary Duty applicable to the goods = (260.87 X Tax- fraction) Taka

= (260.87 X 10/110) Taka

= 24.35 Taka

What is the decreasing adjustment of supplementary duty?

According to the Value Added Tax and Supplementary Duty Act, 2012, the adjustment as the reduction in supplementary duty imports during import duty is a reduction in supplementary duty adjustment.

Chapter 8

Turnover Tax

What is Turnover Tax? What is the rate of it?

Tax paid by Enlisted Persons or persons eligible to be Enlisted, whose annual taxable turnover on their taxable economic activities stands over 3 million and up to 8 million Taka, on the basis of their actual annual turnover is called Turnover Tax. The rate of Turnover Tax is 3%.

What is the duration of Turnover Tax? In which Form Return has to be submitted?

In case of Turnover Tax the duration is in quarterly periods, e.g.:-

  • 01 January to 31 March
  • 01 April to 30 June
  • 01 July to 30 September
  • 01 October to 31 December

Turnover Tax Return has to be submitted in Form VAT-9.2. Return has to be furnished within the 15th day of the following month of the Tax Period.

How Turnover Tax has to be paid?

Turnover Tax payable by any individual for any Tax Period has to be paid before furnishing Return for the said Tax Period.

What is the procedure of maintaining accounts of Turnover Tax?

The Enlisted Person shall maintain accounts of all purchases and sales concerned with his supply, in Form VAT-6.1 and Form VAT-6.2. He will issue, in Form VAT-6.9, Turnover Tax Invoice, against each supply. He will calculate Turnover Tax on the basis of Tax Invoice, that is, on the basis of net taxable sale, issued against supply during each Tax Period. He will submit Return in Form VAT-9.2, on the basis of the said accounts.

How Turnover Tax Invoice has to be issued?

Against each supply numerical series of Tax Invoice under Form VAT-6.9 has to be issued. Separate numerical series of Tax Invoice can be issued if supply is delivered from more than one place. Turnover Tax invoice has to be issued in 02 (Two) sets, of which the original Invoice has to be handed over to the purchaser and copy of which shall be maintained by the Enlisted Person at the premise of his business concern.

Is any Adjustment applicable in case of Turnover Tax?

The amount of advance tax paid by any person shall be adjusted decreasingly against turnover tax.

Chapter 9

Return

What is the procedure of submitting VAT or Turnover Tax Return?

Within the 15th day of the following month of the Tax Period, a Registered Person shall furnish VAT Return in Form VAT-9.1 and a Turnover Tax Enlisted Person shall furnish Turnover Tax Return in Form VAT-9.2, both before the Commissioner.

When Return has to be furnished?

For each Tax Period, Return has to be furnished within the 15th day of the following month after completion of the Tax Period. If the 15th is a public holiday, the same should be furnished on the preceding day. It can be done 24/7 in case of furnishing online.

At which places Return can be furnished?

Return has to be furnished before the Commissioner. In order to furnish Return before the Commissioner, Return can be submitted at the following places:

  • At online portal of the Board, www.nbr.gov.bd;
  • At any convenient VAT Commissionerate or Departmental Office;
  • At any service centre as specified by the Board or the concerned Commissioner;
  • At any Fair conducted by the Board or the concerned Commissioner;
  • At any other place as specified by order of the Board.

What is the procedure of Submitting Return late?

Application has to be made before the Commissioner in Form VAT- 9.3 before a minimum of 7 (Seven) days of expiry of the concerned Tax Period. The Commissioner, within 7 (Seven) days of receipt of the application, after due consideration, shall approve the application. But extension of time shall not be over 1 (one) month.

What is the procedure of revising Return?

Application can be made in Form VAT-9.3.

How Return can be Submitted online? What are the advantages of Submitting Return online?

Return can be submitted at the central portal of the Board online (www.nbr.gov.bd). The advantages of submitting Return online are as follows:

  • The tax payer can submit online from his home;
  • The tax payer need not contact any VAT Office.

If it is a public holiday on the last date of submission of Return (15th of…

If the last date of submission of Return is a public holiday, Return has to be submitted on the preceding working day.

Who shall sign on the Return?

No signature is required on the Return, if submitted online. But in case of submitting Return manually, the Registered or Enlisted Person shall sign on the Return.  If, owing to any reason, it is not possible on his part to sign, authorized person on his behalf, shall sign.

Can Return be submitted without paying Net Tax or paying the same in part?

For a certain Tax Period, full, supplementary or late Return can be submitted, but partial payment shall not be tenable.

Is submitting Return mandatory for all?

Each Registered or Enlisted or fit to be registered or fit to be enlisted individual has to submit Return. It is a mandatory act.

What shall be the consequences of non submission of Return?

Non submission of Return is tantamount to failure or irregularity. According to the provisions of Section 85, Sub Section (2), Article (F) of the law, in case of non submission of Return a fine of Taka 10 (Ten) thousand can be imposed; your institution shall be identified as a vulnerable institution and all activities including import, export shall be at risk.

Chapter 10

Carry forward of negative net amount and refunds

What is Positive Net Tax money?

If , in a tax period, the sum of input tax and the receivable decreasing  adjustments exceeds of output tax, supplementary duty and increasing adjustments for such tax period, which results positive amount of net payable tax is called positive net tax money.

How Negative Net money can be adjusted?

In relation to an economic activity involving construction, house building, land or property development, negative net payable of amount of money shall be carried forward indefinitely and may be deducted in subsequent tax periods. In relation to other cases, this type of money shall be carried forward and may be deducted over the following six periods remaining excess money shall be refunded.

What is refund?

If tax is paid in surplus of tax payable to the Government, or if the Net Tax is negative, in that case the sum should be carried forward up to six Tax periods. Afterwards if the amount of Negative Tax appears to be over 50,000, that sum of money shall be refunded. In such a case refund has to be made within 3 months of application.

How negative net payable amount of money can be refunded?

In order to have the Negative Net money refunded, the amount should be a minimum of 50,000 and if it stands below this amount, carry forward should be undertaken.

What are the conditions of reimbursement?

The applicant shall be required to furnish all VAT Returns up to the current Tax Period. The refundable amount of money should be over Taka 50,000, after deducting interest, penalty.

What are the procedures for reimbursement to diplomatic and international institutions?

Application should be submitted along with authentic documents within 6 months of payment of tax.  In this case reimbursement has to be made within 2 months of online application and within 3 months of application in other methods. In this case residual money should be reimbursed after deducting all penalty, interest and debts and liabilities.

Shall unregistered importers be entitled to have reimbursement? How?

The unregistered individuals shall only be entitled to have Advance Tax reimbursed. Reimbursement will be available on application before the Commissioner online. 

Is there any scope for foreign tourists to have the VAT reimbursed? How?

There is.  They have to stay for less than 180 days and they have to purchase specific goods from the outlets marked “VAT Refund for Tourists”. On the basis of Refund Certificate issued by concerned outlets reimbursement of VAT money shall be made in cash from the Tourists Refund Desk at the Airport Customs office.

Chapter 11

Tax Determination

Why does the Commissioner determine payable Tax?

The Commissioner determines payable Tax on the following grounds, e.g.:-

(a) If any false declaration is given in the Return in respect of Output Tax, Input Tax, Supplementary Duty or Increasing or Decreasing Adjustment;

(b) If any false declaration is given in the Return in respect of Turnover Tax;

(c) In case of failure in furnishing Return within the specified time;

(d) In case of failure in paying payable Tax;

(e)  In case of wrong reimbursement of money.

Within what period of time the Commissioner can determine Tax?

The commissioner can determine tax within 5 years and a notice has to be issued within 45 working days after tax determination.

Is there any provision for pecuniary penalty or interest in case of late payment of Tax?

if a supplier mistakenly treats a taxable supply as an exempted or a zero-rated one, there is a provision for commissioner to impose payable interest or monetary penalty of tax arising out of the late payment of VAT.

Can any application or appeal be made anywhere after revision of the amount of paid Tax…

Appeal may be filed at the Appellate Tribunal after determination or revision of Tax.

Chapter 12

Value Added Tax Authority

Who is the Value Added Tax Authority?

The Value Added Tax Authority includes the Board and the Value Added Tax office under it and the Authority comprising the following VAT officials:

(a) Chief Commissioner, Value Added Tax;

(b) Commissioner, Value Added Tax;

(c) Commissioner (Appeal), Value Added Tax;

(d) Commissioner (Large Tax Payer Unit), Value Added Tax;

(e) Director General, Central Intelligence Cell;

(f) Director General, Audit, Intelligence and Investigation Department, Value Added Tax;

(g) Additional Commissioner or Additional Director General, Value Added Tax;

(h) Joint Commissioner or Director, Value Added Tax;

(i) Deputy Commissioner or Deputy Director, Value Added Tax;

(j) Assistant Commissioner or Assistant Director, Value Added Tax;

(k) Revenue Officer, Value Added Tax;

(l) Assistant Revenue Officer, Value Added Tax; and

(m) Any other officer designated by the Board.

Who are the Value Added Tax officials?

The following officials shall be termed as Value Added Tax Officer:

(a) Chief Commissioner, Value Added Tax;

(b) Commissioner, Value Added Tax;

(c)  Commissioner (Appeal), Value Added Tax;

(d) Commissioner (Large Tax Payer Unit), Value Added Tax;

(e) Director General, Central Intelligence Cell;

(f) Director General, Audit, Intelligence and Investigation Department, Value Added Tax;

(g) Additional Commissioner or Additional Director General, Value Added Tax;

(h) Joint Commissioner or Director, Value Added Tax;

(i) Deputy Commissioner or Deputy Director, Value Added Tax;

(j) Assistant Commissioner or Assistant Director, Value Added Tax;

(k) Revenue Officer, Value Added Tax;

(l) Assistant Revenue Officer, Value Added Tax; and

(m) Any other officer designated by the Board.

What are the main functions of the Value Added Tax Officer?

The main functions of the Value Added Tax Officer are as follows:

(a) Realizing Tax and activities in respect of maintenance of its accounts;

(b) Enforcement of this law and rules and regulations framed under it and administrative activities; and

(c) Performing any other duty or responsibility and activities assigned by the Board with a view to achieving objectives of this law.

What are the main duties and responsibilities of the Value Added Tax Authority?

The Board shall perform all other duties and responsibilities including policy making duties of the VAT Authority. In accordance of the provisions of Section 79 with a view to achieving this objective, the Value Added Tax officials shall perform under the Board, the following activities:

  • Realizing Tax and activities in respect of maintenance of its accounts;
  • Enforcement of this law and rules and regulations framed under it and administrative activities; and
  • Performing any other duty or responsibility and activities assigned by the Board with a view to achieving objectives of this law.

What type of power a Value Added Tax official can exercise in the course of performing…

He will be entitled to exercise any power and perform any activities assigned on him by the Board. Moreover, He will be entitled to perform any duties and responsibilities, exercise power and perform any activities assigned on him by higher authorities or be entitled to perform any duties and responsibilities, exercise power and perform any activities of subordinate officials.

How the forfeited records and documents can be brought back?

The forfeited records or documents can be returned after fulfilling the purpose of forfeiting.

Or, if the purpose of forfeiture is served by photocopies of the forfeited records or documents, original records or documents can be returned preserving the photocopies.

How forfeited goods or carriers of goods can be released?

Forfeited goods or carriers of goods shall be released after the purpose of forfeiting the goods or carriers of goods are served. But even if the purpose of forfeiture is not finally settled, the forfeiting officer or any other officer higher in rank, in view of an application filed by the bona fide owner, in Form VAT-12.8, for release of such carriers, and subject to the following satisfactory conditions, with the approval by the Commissioner, shall be entitled to release the forfeited goods or carriers of goods:

  • That the owner or driver of the goods or carriers loaded with goods did not take part in the past in transportation of such goods.
  • That as a result of releasing the goods or carriers loaded with goods, disposal of pending litigation in respect of the said carriers shall not be jeopardized for ends of justice or no relevant evidence shall be destroyed.

If the conditions are fulfilled, permission of release of such goods or carriers of goods in Form VAT- 12.9 in favor of the bona fide owner shall be accorded subject to proper undertaking.

When a Bank account may become inoperative?

Bank accounts may be made inoperative in case of violation of any provision of the law or for the purpose of audit under Section 91 of the law or in order to realize arrear taxes under Section 95 of the law.

If the VAT officials seek any assistance, is any other agency or force bound to extend…

According to the provisions of Section 82 of the Value Added Tax and Supplementary Duty Act 2012, the VAT officials, in course of performing their duties, as of legal requirement, shall be extended mandatory assistance by:

  • Bangladesh Police;
  • Border Guard Bangladesh;
  • Bangladesh Coast Guard;
  • Bangladesh Ansar;
  • Union Parishad, Upazila Parishad, Municipality, Zilla Parishad, City Corporation authority;
  • Customs, Duty and Income Tax Department;
  • Narcotics Department;
  • All Government officials; and
  • All Bank officials.

If the VAT officials request any member, authority or officer or any other individual as aforesaid, to supply statement of immovable and movable properties, statement of Bank accounts, any other information including documents of any individual, the concerned member, authority or officer shall be bound to supply the same.

Can the VAT officials undertake any search and forfeit anything entering any commercial concern?

Any VAT official not below the rank of Assistant Commissioner, being duly authorized by the Commissioner, can undertake search entering commercial concerns and can examine and forfeit the records, files, documents and accounts.

How the VAT officials can impose fine?

According to the provisions of Section 85 of the Value Added Tax and Supplementary Duty Act 2012, the Commissioner, in cases of failure or irregularity, shall impose fine in the following manners:

Sl No Failure or Irregularity Amount of Fine
1 Failure or irregularity as regards non filing of application for Registration or Enlistment within specified time limit; Taka 10 (Ten) thousand only
2 Failure or irregularity as regards not displaying Registration or Turnover Tax Certificate at the right place; Taka 10 (Ten) thousand only
3 Failure or irregularity as regards not intimating the Commissioner about change in information of Economic Activities within specified time limit; Taka 10 (Ten) thousand only
4 Failure or irregularity as regards not submitting application for cancellation of Registration or Enlistment within specified time limit; Taka 10 (Ten) thousand only
5 Failure or irregularity as regards non compliance of the provisions under Section 9(5); Taka 10 (Ten) thousand only
6 Failure or irregularity as regards not furnishing VAT or Turnover Tax Return within specified date; Taka 10 (Ten) thousand only
7 Failure or irregularity as regards non inclusion of any amount of Output Tax in the Return; Double the amount of Output Tax not included
8 Irregularity as regards receiving superfluous Credit on admissible Input Tax  in the Return; Double the amount of Input Tax received irregularly;
9 Irregularity as regards increasing the amount of Decreasing Adjustment or decreasing the amount of Increasing Adjustment in the Return; Double the amount of increased Decreasing Adjustment or double the amount of decreased Increasing Adjustment
10 Failure or irregularity as regards non submission of Tax Invoice, Credit Note, Debit Note, Adjusted Tax Invoice  or Withholding Tax at Source Certificate; Taka 10 (Ten) thousand only
11 Failure or irregularity as regards not maintaining records in specified method; Taka 10 (Ten) thousand only
12 Failure or irregularity as regards not depositing specified Security; Taka 10 (Ten) thousand only
13 Irregularity as regards willfully evading or trying to evade  imposed Tax Assessment and payment; Double the amount of Tax evaded.

Shall my information as maintained by the VAT authority, remain confidential?

According to the provisions of Section 89 of the Value Added Tax and Supplementary Duty Act 2012 and subject to the provisions of Right to Information Act 2009, all your information as Tax Payer shall remain confidential with the VAT authority.

Chapter 13

Supply under Supervision

Does the VAT official have any jurisdiction to audit any commercial concern?

The VAT official reserves the right of auditing all aspects of Economic Activities of any individual.

What is Supply under Supervision?

If any tax payer fails to comply with the provisions of this law in order to evade Supplementary Duty, the Commissioner, under the supervision of one or more officer, can observe and watch, in case of supply, at the place concerned with Supplementary Duty imposable Economic Activities. Such arrangement is called Supply under Supervision.

In which cases Supply under Supervision is applicable?

Supply under Supervision is applicable exclusively in cases where the provisions of this law are not complied with in order to evade Supplementary Duty. Such provisions are not applicable in cases of business concerns where there is no scope for Supplementary Duty.

How Supply under Supervision shall be complied with?

In order to conduct Supply under Supervision, the Commissioner, by order, shall constitute one or more teams comprising one or more officers and staff. Such order by the Commissioner shall specify venue, time and duration of the Supervision. The Supervision Team, before starting with the Supervision, shall inspect the place of supply and submit a preliminary report to the Commissioner in From VAT-13.1.

Subsequently, the Team shall submit reports on daily activities within the following working day in Form VAT- 13.2 and after end of the term of supervision, shall submit final report in Form VAT-13.3, all to the Commissioner.

Which documents are required to be maintained by the Tax Payers for preparation of Audit?

The Tax Payers shall maintain Return, accounts of Purchase and Sale, Tax Invoice, Debit Note, Credit Note, documents of all accounts including accounts of Adjustments for each Tax Period, for the purpose of preparation of Audit. Moreover, other documents concerned with Economic Activities, e.g., accounts of Import, Export, Annual Audit Report, Bank Accounts etc. can also be maintained.

What type of preparation may I take for future Audit?

For any future Audit you can take preparation by maintaining all Tax Accounts for the unaudited period of your Activities, keeping in view the documents related to the last Audit. With this end in view you can take preparation for Audit by maintaining properly, Return, accounts of purchase and sale, Tax Invoice, Debit Note, Credit Note, Adjustment account, Import Export accounts, Annual Audit Report, Bank account, etc. for the concerned period.

Which type of information may be scrutinized during Audit?

During Audit, all documents concerned with the individual’s Economic Activities, may be scrutinized, as for example:

  • Return;
  • Tax Invoice;
  • Accounts of purchase and sale;
  • Debit note, Credit Note;
  • Adjustment account;
  • Import Export accounts;
  • Bank account;
  • All relevant accounts including Annual Audit Report.

Chapter 14

Arrear Realization

What is Arrear? How does it accrue?

When a taxpayer does not pay VAT, Supplementary duty, Turnover tax, Interest or penalty or any kind of claim under this law in due time, its turn to arrear tax.
When and How it accrue

1. Any nonpayment in Return

2. Any payment ordered by commissioner remain unpaid

3. Any order from any court to pay tax, remain unpaid.

4. Any detection in Audit or Investigation.

When Tax has to be paid? What is the consequence of not paying Tax within specified…

Tax has to be paid before submission of the Return. But in cases of Tax determined by the Commissioner and Tax accrued by disposal of any activity under the law, Tax has to be paid within the specified time as mentioned in the notice. The said Tax shall be considered as Arrear Tax if not paid within specified time.

Who is the officer authorized to realize Arrear Tax?

The DRO (Debt Recovery Officer) is the authorized officer on behalf of the Commissioner, in case of realizing Arrear Tax. The DRO will be an officer at least of the rank of the Deputy Commissioner.

From which sources Arrear Tax can be realized?

Arrear Tax can be realized from the following cases-

  • From any sum of money of a defaulter Tax Payer which remains under the control of any Income Tax, Duty, VAT or Customs authority;
  • From any sum of money of a defaulter Tax Payer which is deposited to any other individual or allied Financial Institution or Bank;
  • By selling any immovable or movable property, if such property is owned by the defaulter Tax Payer.

In which procedure the VAT authority can realize Arrear Tax?

The DRO, on behalf of the Commissioner, shall, in Form VAT- 14.1, serve Arrear Tax Realization Certificate on the defaulter Tax Payer. Subsequently the DRO shall arrange realization of Arrear Tax by initiating the following activities:

  • By deducting from any sum of money of a defaulter Tax Payer which remains under the control of any Income Tax, Duty, VAT or Customs authority;
  • By ordering such individual or Bank to pay from any sum of money of a defaulter Tax Payer which is deposited to any other individual or allied Financial Institution or Bank.
  • By ordering to stop supply of any goods or service from his business concern.
  • By locking Business Identification Number at the Bill of Entry Processing System of the Customs House in order to stop releasing his imported goods.
  • By freezing his Bank account in the specified manner.
  • By issuing order to the Tax Payer’s business concern under lock and key or by locking the same in the specified manner.
  • By realizing Arrear Tax by way of seizing any immovable property or forfeiting any movable property of him and selling the same in the specified manner.
  • By receiving surety under specified conditions and prescribed manner from any custodian of the defaulter Tax Payer.

Is there any provision of installment for paying Arrear Tax?

The Commissioner can allow payment of Arrear Tax in installments within specified time limit, under proper conditions and manner, but the time limit for paying Arrear Tax shall not exceed 12 (Twelve) months.

What will be the consequence of non-payment of arrear?

In case of non payment of arrear the VAT authority will go for legal measure under departmental and even criminal procedure.

This procedure includes:

1. Freezing bank account

2. Stopping production

3. Direct other authority to realize

4. Croke the movable property

5. Injunction on immovable property

6. Arrest etc

Who is a Receiver?

A Receiver is an individual appointed or authorized by any legal entity or court who performs the duty of a Receiver of any property under orders and jurisdictions of any legal entity or court. 

What is the duty of a Receiver?

The duty of a Receiver is to maintain a certain property temporarily being appointed or authorized by a legal entity or court. 

What are the liabilities of the Director or the Entrepreneur in case of payment of Arrear…

During accrual of any Arrear Tax if any company or individual or Director or Entrepreneur of a property development fails to prove resorting to proper care and responsibility and efficiency, in such a case, all of them, jointly and individually, shall be liable to pay that amount of money.

How arrear after death or in case of pecuniary incapacity shall be realized?

In case after death of a Tax Payer or after his being declared bankrupt, if his Economic Activities are run by a Trusty or Executor, Arrear Tax can be realized from such Trustee or Executor.

How realized arrear amount of money shall be disbursed?

Disbursement shall take place in the following preferential order:

  • Firstly, by paying the amount of payable interest;
  • Secondly, by paying the amount of pecuniary penalty or fine;
  • Thirdly , by paying the amount of VAT, Supplementary Duty or Turnover Tax;

Provided that if Arrear Tax is realized from the sale proceeds of the forfeited goods, in that case in accordance with the provisions of Section 100 of the law, Disbursement has to be made in the following manner:

  • Firstly, by forfeiting the goods, by maintenance and payment of expenses of sale;
  • Secondly, by paying an equal amount of money for which goods was forfeited to realize an amount of Arrear Tax;
  • Thirdly, by paying any payable Tax under the law superseded by this law; and
  • Fourthly, by reimbursing residual money, if any, to the owner of the goods.

Chapter 15

Records

What are Records?

The following items shall denote Records or Documents:

  • Statement of purchase or sale of any goods, service or immovable property and concerned Invoice;
  • Tax Invoice, Credit Note, Debit Note, Withholding Tax at Source Certificate, etc;
  • Documents related to import or export;
  • Records related to Credit;
  • Documents related to Supplementary dutiable Goods or services;
  • Return;
  • Treasury Consignment; and
  • Any other documents concerned with business activities.

Is it mandatory for the Tax Payer to maintain Records?

It is mandatory to maintain Records of his Economic Activities in order to assess Tax liability and other debts and liabilities of the Tax Payer.

How long Records has to be maintained?

Records has to be maintained up to 05(Five) years in order to assess Tax liability and other debts and liabilities of the Tax Payer. 

Which topics will save of records Taxpayers?

The record sheet of the following topics should be kept:

  • Sale of any product, service or real estate purchase or sale, and related invoices
  • Tax invoice letter, credit note-debit note, integrated tax invoice letter and source tax deduction certificate
  • Import or export related documents
  • rebate related records
  • Supplementary duty-imposed products or Service related documents.
  • Returns
  • Treasury invoice; And
  • Any other documents.

Where shall the Tax Payer maintain the Records?

Records has to be maintained by the Tax Payer at the premises concerned with the Economic Activities in case of maintenance in manual method.

What is the procedure of serving Notice?

Following is the procedure of serving Notice:

  • Temporary Notice has to be served upon the individual or his representative to whom the Notice is applicable;
  • Notice has to be sent to the last known residential or business address of the individual in Bangladesh;
  • Notice has to be sent to the last known address by Registered Post;
  • Notice has to be sent in electronic method;
  • If Notice can’t be served in any of the above procedures, the Notice for enforcing Value Added Tax has to be served by affixing on a board;

Following at least one of the above procedures will be enough. But more procedures can also be followed.

Is there any provision for maintaining Records in Digital method?

Records can be maintained in electronic or Digital method following provisions of the law and the Rules and Regulations. No prior permission by the Board is required for this.

Is it compulsory to keep documents in paper when it is stored in digital system?

Value Added Tax and supplementary duty will be a tax based online tax system. So that a taxpayer can easily save and exchange his documents, sitting at home. In addition to the taxpayers, he will be able to preserve the records in the digital system as well as preserve documents on paper for his convenience. However, it is not mandatory to keep documents on paper.

Chapter 16

Offences, Penalty and Procedure of Adjudication

What is an Offence?

According to the Value Added Tax and Supplementary Duty Act 2012, Offence is an offence mentioned in Section 111, 112, 113, 116 and 117.

Offences:

Section 111: Creating forged or fake VAT Registration Certificate or Turnover Tax Certificate, Tax Invoice or documents concerned with VAT. 

Section 112: False or misleading statement in documents concerned with VAT with mala fide intention.

Section 113: Creating obstruction.

Section 117: Abettor to an offence.

What types of Penalties are provided for which Offences?

Penalties in accordance with the type of any Offence are outlined below according to the provisions of Section 111, 112 and 113 of the Value Added Tax and Supplementary Duty Act 2012:

Section 111:

  • If creates or uses forged or fake VAT Registration Certificate, Turnover Tax Certificate or Tax Invoice and Withholding Tax at Source Certificate, with mala fide intention;
  • If creates and uses forged and fake Credit and Debit Note;
  • If any individual evades Tax in any manner or claims reimbursement of Tax without being entitled  to, such individual shall be liable to:
    • be sentenced with imprisonment for one year or
    • be sentenced to pay pecuniary penalty equivalent to the taxable amount or
    • be sentenced to suffer both penalties simultaneously.

Section 112:

  • If any individual supplies to any VAT official any false or misleading information  with mala fide intention, such individual shall be liable to:
    • be sentenced with imprisonment for a term not exceeding 6 months or
    • be sentenced to pay pecuniary penalty equivalent to the taxable amount or
    • be sentenced to suffer both penalties simultaneously.

Section 113:

  • If any individual tries to obstruct with mala fide intention, any official during performance of his duty in accordance with the law and Rules and Regulations, such act shall be considered as Offence. For such Offence the concerned individual shall be liable to:
    • be sentenced with imprisonment for a maximum term of 6 months or
    • be sentenced to pay pecuniary penalty from a minimum amount of taka ten thousand up to a maximum amount of Taka two hundred thousand or
    • be sentenced to suffer both penalties simultaneously.

Moreover, according to the provisions of Section 117 of the law, any individual assisting or abetting in the commission of any offence, shall be held guilty as well on equal footing as of the individual committing the Offence and shall be convicted.

What is Compounding in an Offence? How can it be done?

Compounding of Offence is the arrangement of disposal of Offences in the manner and subject to the conditions specified by the Board, before or after prior approval by the Commissioner to institute any Case.

Procedure of Compounding Offence:

  • The accused individual shall apply in writing before the Board, for compounding the Offence;
  • Shall undertake by Affidavit, to pay the Tax (in installments) related to the allegation specified by the Commissioner; and
  • The individual shall, exclusively bear all expenses as regards compounding the Offence;
  • The Board shall not compound any Case if the individual had committed any similar Offence in the past;
  • The Board shall, in order to compound an Offence, allow hearing of the applicant and the concerned Commissioner and officer filing the allegation.

What is the procedure of filing Case for Criminal Offence?

An officer not below the rank of Assistant Commissioner, subject to prior permission by the Commissioner, shall file through a written allegation, a Case of Criminal Offence in the Court.

Who will conduct Inquiry of Case filed for Criminal Offence?

In case of inquiry into Criminal Offence, The VAT officer shall conduct the inquiry.

What is the procedure of Inquiry of Case filed for Criminal Offence?

The Inquiry Officer shall intimate the accused individual about the allegation, in Form VAT– 16.1 and request him to submit stated deposition before him within 15 days. The accused individual shall submit deposition in Form VAT– 16.2.

The Inquiry Officer after completing the inquiry within 4 months of taking cognizance of the Case shall submit Inquiry Report through the Commissioner. But the Court can extend such time limit up to 3 months in view of an application by the Inquiry Officer.

Is there any provision for Appeal under the purview of VAT?

Provision for preferring Appeal is there within 90 (Ninety) days of issuing the Order. 

Is there any provision for Review under the purview of VAT?

If aggrieved against any Order by the Board or the Appellate Tribunal, the aggrieved individual or the aggrieved Commissioner or such VAT official who is not below the rank of Director General, can file Revision Petition against such Order before the High Court Division of the Supreme Court.

In which cases Appeal may be preferred?

If any Tax Payer or VAT official is aggrieved by any decision taken or order issued by an Additional Commissioner or any VAT official lower in rank under the law, he can, within 90 (Ninety) days of issuance of such decision or order, file an Appeal in the prescribed manner,  before the Commissioner (Appeal).

What is the procedure of Appeal?

If any Tax Payer is aggrieved by any decision taken or order issued by an Additional Commissioner or any official lower in rank, he can, within 90 (Ninety) days of issuance of such decision or order, file an Appeal in the prescribed manner, before the Commissioner (Appeal).

Does the Tribunal have any jurisdiction to order Injunction?

No, it does not have. But if the Tribunal, after completion of hearing deems reasonable, it may issue interim stay order on realization of Tax.

What are the advantages of ADR?

An individual can dispose his case on the basis of understanding through ADR or Alternate Dispute Resolution.

If any case is disposed of on the basis of understanding, no objection can be raised against such understanding and in case any matter is not disposed of, previous course of action can be started afresh in accordance with the provisions of law.

If a dispute on any matter can’t be disposed of in the course of Alternate Dispute Resolution, the time lapsed for resorting to this process, shall not be inclusive of the limitation of time for filing an Appeal.

Is there any provision for depositing money in case of Appeal? If so, what is the…

The provision for depositing money in case of Appeal is ten per cent of the claimed amount of Tax or if there is no claimed Tax, amount of money shall be ten percent of the imposed fine.

Is there any limitation of time in case of Appeal?

Appeal can be filed before the appropriate authority within 90 (Ninety) days of issuance of the decision or the order.

Is Writ an Appeal?

No, Writ is not an Appeal. Writ and Appeal are two different terms and their definitions are also different. Appeal has been discussed under Sections 121 and 122 of the Value Added Tax and Supplementary Duty Act 2012 and Rule 98 of the same law.

According to Sections 121 and 122 if any individual or VAT official is aggrieved against any verdict, he can prefer an Appeal within 90 (Ninety) days of issuance of such order, before the Appellate Commissionerate or the Appellate Tribunal, in applicable cases.  If any Tax Payer is aggrieved by any decision taken or order issued by an Additional Commissioner or any VAT official lower in rank, he can file an Appeal before the Appellate Commissionerate and any individual or VAT official aggrieved by any decision or order by the Commissioner or the Commissioner (Appeal) can prefer an Appeal before the Appellate Tribunal. On the other hand, Writ is submitted before the Honorable High Court when Fundamental Rights under Article 102 of the Constitution, are violated.

In which Cases Review may be preferred?

Any individual or Commissioner or any VAT official not below the rank of Director General, aggrieved by an order by the Board or the Appellate Tribunal, can file a Revision petition against such order before the High Court Division of the Bangladesh Supreme Court.

What is ADR?

According to Section 125 of the VAT Act (2012), ADR is an Alternative Dispute Resolution, which means alternative dispute settlement. Any case running in this manner was resolved with the help of a third party in consultation with the two parties.

Is there any money to go to ADR?

In the case of settlement of the case by way of settlement of ADR or alternative dispute, section 255 of the Value Added Tax and Supplementary Duty Act, 2012, and the Value Added Tax and supplementary duty rules, 2016, the amount of VAT payable to the person (if applicable) of twenty five (25) Percentage of payment by way of pay order will be applied in VAT 17.1 in the stamp of Rs. 500 / -.

Who are Aides? What are their duties? Where from their list can be obtained?

The following persons are called Aides:

  • Such a retired VAT official not below the rank of a Joint Commissioner who is an expert and is efficient in matters relating to Value Added Tax;
  • Such a retired officer not below the rank of an Additional District Judge;
  • A lawyer or Chartered Accountant having experience about Value Added Tax for 07 (Seven) years;
  • Such a retired officer not below the rank of a Deputy Secretary who is efficient about law and legislative affairs.
  • Any businessman having experience in business sector for a period of at least fifteen years and who is an expert in Value Added Tax related matters.

Duties of an Aide:

  • The Aide, in respect of the dispute under consideration, in consultation with the applicant and the Departmental representative, shall-
    • Determine subject matter of the Resolution or decision;
    • Determine procedure, strategy or structure of the Alternate Dispute Resolution;
    • Determine venue, date and time of discussion meeting with a view to conduct Alternate Dispute Resolution;
    • Apprise both the parties in writing, asking them to submit necessary documents specifying time;
  • The Aide shall mediate between the applicant and the Departmental representative with a view to arriving at a legal settlement in respect of a dispute between both the parties.

The National Board of Revenue shall prepare a list of the Aides. The list of the Aides shall be available on the website of the National Board of Revenue.

In which cases ADR may be preferred?

If the Tax payer is interested to resolve any dispute amicably, in case of pending Cases lying before the Appeal Commissionerate and the Appellate Tribunal, he can resolve the dispute through Alternate Dispute Resolution. Moreover, Writ Petition or Dispute Resolution pending as Appeal before the High Court Division or the Appellate Division of the Supreme Court can also be resolved in accordance with applicable provisions. 

What are the rights of the Applicant in case of application for ADR?

The Applicant has the following rights in case of Alternate Dispute Resolution:

  • In case of Alternate Dispute Resolution, discussing independently about Resolution with designated Departmental Representative under supervision of the designated Aide; and 
  • The Applicant can himself participate in the process of Dispute Resolution with a view to resolving the dispute. If he desires, he can also designate any professional advisor.

When Appeal may be preferred before the High Court?

Appeal may be preferred before the High Court when in the following cases:-

  • If any Tax Payer is aggrieved by the order of the Board or the Appellate Tribunal;
  • If the Commissioner or any VAT official not below the rank of a Commissioner is aggrieved by any order of the Board or the Appellate Tribunal, he may submit an application of Appeal or Revision before the High Court Division of the Supreme Court.